Firm-to-firm relationships and the pass-through of shocks: Theory and evidence

Arbeitspapier

Economists have long suspected that firm-to-firm relationships might lower the responsiveness of prices to shocks due to the use of fixed-price contracts. Using transaction-level U.S. import data, I show that the pass-through of exchange rate shocks in fact rises as a relationship grows older. Based on novel stylized facts about a relationship's life cycle, I develop a model of relationship dynamics in which a buyer-seller pair accumulates relationship capital to lower production costs under limited commitment. The structurally estimated model generates countercyclical markups and countercyclical pass-through of shocks through variation in the economy's rate of relationship creation, which falls in recessions.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Staff Report ; No. 896

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) ; Business Fluctuations; Cycles ; Empirical Studies of Trade ; Transactional Relationships; Contracts and Reputation; Networks
• Thema: prices ; exchange rate ; supply chain ; trade relationships

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Heise, Sebastian
• Ereignis: Veröffentlichung
• (wer): Federal Reserve Bank of New York
• (wo): New York, NY
• (wann): 2019

Weitere Informationen

• Handle: http://hdl.handle.net/10419/210748
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ